Illinois moved Tuesday to take control of Land of Lincoln Health to begin an orderly shutdown of the insurance company, meaning about 49,000 people will lose their health coverage in the coming months.

The state said it will allow policyholders to buy coverage from a different insurer before their Land of Lincoln plans are terminated, but it's unclear when the policies will lapse.

"It's a bad day for the marketplace in Illinois and our consumers," said Jason Montrie, president and interim CEO of Chicago-based Land of Lincoln. "This is the end."

The Department of Insurance said the decision was based on the startup company's deteriorating financial condition. Land of Lincoln is required to pay $31.8 million to other insurers under a complex formula in the Affordable Care Act, which aims to keep premiums stable by balancing risks among insurers.

But the payment placed too much financial stress on Land of Lincoln after it lost more than $90 million last year.

Acting agency Director Anne Melissa Dowling tried to intercede on the company's behalf by suspending the payment until Land of Lincoln received promised federal financial assistance under the health-care law, known as Obamacare. But the federal Centers for Medicare and Medicaid Services didn't agree with Dowling's plan.

"It's frustrating that our consumers are being put in harm's way," Montrie said. "Nobody feels worse about this than me and my employees. We are so disappointed in the decision from CMS."

A spokesman at the U.S. Department of Health and Human Services declined to comment.

Nationally, Land of Lincoln was one of 23 nonprofit health insurers — co-ops, as they are commonly known — that started in 2014 thanks to $2.4 billion in loans provided under the health law. In Illinois, the Metropolitan Chicago HealthCare Council, a hospital trade association, received $160 million in funding to start a health plan.

The goal of the co-op program was to give consumers an alternative to the big insurance companies such as Blue Cross and Blue Shield of Illinois that could potentially lower the cost of health plans. More than 1 million Americans were insured through these plans.

But many co-ops struggled early. Some grew too fast and couldn't keep up with the health costs of their members, many of whom had not had insurance in years.

Then they were blindsided last year when federal money they counted on to offset their losses didn't come through.

Land of Lincoln tried to survive by curtailing sales of new policies in the group and individual markets. The co-op also sued the federal government in an effort to recoup more than $70 million under one federal program.

But the lawsuit won't save the company. Dowling has asked the Illinois attorney general to petition Cook County Circuit Court for an "order of rehabilitation" to protect the co-op's policyholders. During that process, health care providers must continue to honor their contracts with the company.

If granted, the company will operate under Dowling's supervision to ensure that policyholder claims are paid. In order to maintain their health coverage during this time, policyholders must continue to pay their premiums.

Customers will have to find new coverage before the year ends. Dowling will work with the federal government to establish a special enrollment period so policyholders can purchase another health plan on the Illinois exchange.